Measure to Keep E-Rate Funds on Track

Congress has extended for an additional year an exemption of budget rules governing the federal E-rate program, which supports telecommunications services in schools and libraries. A one-year exemption passed in 2004 was scheduled to expire at the end of the year.

The exemption allows the $2.25 billion program to commit federally collected money to school telecommunications services based on future revenue, instead of the cash-and-carry rules the Federal Communications Commission imposed last year.

Without the exemption, the FCC would have had to collect a larger slice of the telephone revenues garnered by the nation’s telecommunications companies—currently 10 percent—to fund the E-rate and other programs to subsidize phone services for low-income and rural communities. The companies typically pass along that tax to consumers’ phone bills. Or the FCC might have slowed down the awarding of E-rate discounts, which would have delayed reimbursements of phone and Internet bills to schools and libraries and resulted in delays or cancellations of classroom networking projects.

House and Senate negotiators added the exemption to the fiscal 2006 commerce, justice, and science appropriations bill, which won final passage last month and was signed by President Bush Nov. 22.